Friday, March 12, 2010

The Second Law of Thermodynamics

Entropy, the Second Law of Thermodynamics (a basic tenet of physical chemistry) basically says that all matter in the universe naturally progresses from a higher state of energy and organization to a lower state of energy and disorganization.  (In other words, that back fence of yours will chip, peel, rot, and eventually fall down unless you put more energy into it periodically in the form of sanding, painting, etc.)  I can't help the feeling that the U.S. financial regulatory system is a victim of entropy caused by long-term neglect.  And the only reason the U.S. financial system also, in fact, hasn't totally collapsed is the incredible injection of money (not to mention blood, sweat and tears) by Uncle Sam's minions.  However, we all know that if you don't maintain that back fence in the right way - with the right materials (do I use galvanized nails or not?) and at the right time - that you end up "patching" instead of properly "maintaining".  And don't forget, regular maintenance costs money - and lack of maintenance costs you even more in the end.  Has the U.S. done enough to thwart the Second Law?